The financial regulator has been sent a formal letter kick-starting the legal process which could lead to a judicial review of the controversial time-bar on PPI claims, MoneySavingExpert.com can reveal.

Claims management company 'We Fight Any Claim' has launched the legal bid to block the 29 August 2019 deadline for consumers to claw back cash for mis-sold PPI policies - and has warned the Financial Conduct Authority (FCA) it believes the deadline is "unlawful".

PPI stands for 'Payment Protection Insurance'. It's designed to cover your loan or credit card repayments in the event of an accident, sickness or unemployment – but was frequently mis-sold.

MSE would NEVER suggest using a claims firm to reclaim PPI - see our Reclaim PPI for Free guide for how to do it yourself. But MSE founder Martin Lewis has previously warned the reclaim deadline is a mistake and puts the protection of the financial industry ahead of consumers.

Martin Lewis
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How the deadline is being challenged

We Fight Any Claim is seeking a judicial review of the FCA's decision to bring in the deadline. A judicial review is a type of court proceeding in which a judge reviews the lawfulness of a decision or action made by a public body (such as the FCA).

The first stage of seeking a judicial review is for the person or organisation challenging the decision to send what's known in legal jargon as a 'pre-action protocol letter' - essentially warning that a legal challenge is forthcoming.

In its pre-action protocol letter, seen by MSE, We Fight Any Claim argues the introduction of a reclaim deadline is not in the best interests of consumers, who it insists could still be owed as much as £80bn.

The FCA has been given until the end of this Sunday (16 April) to respond to the findings in the letter, although We Fight Any Claim has said it's prepared to grant an extension if necessary. The claims company has vowed to start judicial review proceedings at court unless the regulator agrees to address the concerns raised.

Mark Davies, legal advisor at We Fight Any Claim, told us: "Obviously we're a business and businesses need to make money, but there's a moral dimension to this and we want to see all affected people get their money back, not just those we represent.

"There are huge swathes of people out there who have been sold this horrible product that have got no hope of being told by their bank that they can claim. This issue with PPI has crossed a line."

The FCA has declined to comment on the legal challenge.

Martin quoted in legal challenge letter

MoneySavingExpert has long warned against using a claims management company for PPI reclaims - - it's easy to do it yourself and crucially you won't have to sacrifice any of your cash in commission. Check out our Reclaim PPI for Free guide for full info.

Nevertheless, in this instance We Fight Any Claim's legal challenge could ultimately benefit all affected consumers. - and Martin is staunchly opposed to the FCA's decision to bring in a deadline.

We Fight Any Claim's legal letter quotes Martin on the topic.

It states: "We listened with interest to Ms Megan Butler, director of supervision, on behalf of the FCA, being interviewed by Martin Lewis OBE on Radio Five Live on 6 March 2017 where, to Mr Lewis' total disbelief ('absolutely astounding'), Ms Butler repeatedly insisted that the only reason for the deadline is to further the interests of consumers; accepted that you did not know how much redress would remain unclaimed after the expiry of the deadline; and stated that (on the question of letter writing) the position was that firms' records were 'a bit incomplete and inadequate'.

"We should be grateful to know whether the FCA stands by these statements."

Legal challenge to PPI deadline launched
We Fight Any Claim has calculated that affected consumers could still be owed as much as £80bn

August 2019 deadline set for claims

Last month the FCA announced that claims over how PPI was sold must be received by the firm you're complaining to on or before 29 August 2019, or they won't be considered. Complaints received ahead of the deadline will then be allowed to run their course. See the Final PPI

The regulator has said it will run a two-year communications campaign, which will be launched in August 2017, to alert consumers to the PPI reclaiming deadline.

It was also announced last month that new grounds will apply for making a PPI claim, following a Supreme Court judgment in November 2014 – known as the 'Plevin ruling' – which extended the definition of mis-selling. You can now claim if your provider earned a high level of commission from your PPI and this wasn't made clear – millions more may be able to claim as a result.

How to reclaim PPI

We've full help and a free tool to reclaim in our Reclaim PPI for Free guide, but in brief:

  • Step 1. Find the paperwork. There's no time limit on PPI reclaiming – you can go back as long as you like, providing you've evidence. Check loans, credit cards, mortgages, store cards and overdrafts to see if there was PPI. It will have been called something like 'payment insurance' or 'accident or sickness insurance'.

    If you don't have your paperwork, you can request it from your lender going back up to six years. If you can't remember who your lender was, check your credit file, which you can do for free.
  • Step 2. Were you mis-sold? Typical examples include if they lied that PPI was compulsory or it'd cut your loan costs; sometimes it was added without asking, or even after you'd said no.

    They had a duty to ensure it was suitable for you – it may not have been if, for example, you were self-employed but got unemployment cover, or you had a past medical condition they didn't ask about. And now the simple fact the commission on the PPI was over 50% (which it usually was) and you weren't told counts as mis-selling.
  • Step 3: Do it yourself for free. Again, this needs shouting from the rooftops. You do NOT need to pay to reclaim – no way, absolutely not, never! Companies known as claims handlers do very little for you that you can't do yourself, and they take 30% of your payout – often many £1,000s. To do it easily use our free reclaim tool.
  • Step 4: Expect a rejection. Sometimes the banks, building societies or other lenders say 'fair cop' and pay out thousands in days. Yet equally they often say no. That doesn't necessarily mean you don't have a case, just that it's the lender trying to put you off. If you believe you were mis-sold, just see this as part of the dance because the real decision comes at the next stage.
  • Step 5: Go to the free Financial Ombudsman Service (FOS). If you're rejected, you have six months to take your case to the FOS, an independent body which can adjudicate and force banks to pay you back. To make it easier, our free reclaim tool does this for you. If you're struggling or unsure, the Ombudsman has a helpline – call 0300 123 9123.